The Senate Armed Services Committee’s (SASC) markup of the fiscal year 2020 National Defense Authorization Act (NDAA) includes more funds for the Defense Department to develop the ability to produce rare earth elements, in order to take back global market share from China.
The SASC’s NDAA executive summary, released May 23, includes $3.5 million in research, development, test and evaluation (RDT&E) funds “for the Department of Defense to develop the capability to produce rare earth elements from coal ash, a market that China currently dominates,” the committee said.
The Defense Department has previously appropriated research-and-development funds through the Defense Logistics Agency’s Small Business Innovative Research (SBIR) program for the research of new dual-use technologies with both defense applications and commercial uses, to include the development of rare earth elements, according to the FY ’20 presidential budget request justification books.
Congress appropriated about $10 million in FY ’19 to pursue such technologies, but the FY ’20 budget request did not include any new funds throughout the Five Years Defense Program (FYDP).
An October 2018 Defense Department report on the state of the U.S. defense industrial base sounded the alarm on the U.S. defense market’s reliance on rare earth minerals and chemicals that are used in the development of munitions, missiles and other capabilities (Defense Daily, Oct. 4, 2018) . While such elements are found in around a dozen countries worldwide, China dominates the market, reporting over 100 import sources available. Japan, the second largest provider, reported 25 sources, according to the report, titled “Assessing and Strengthening the Manufacturing and Defense Industrial Base and Supply Chain Resiliency of the United States.”
“China has strategically flooded the global market with rare earths at subsidized prices, driven out competitors, and deterred new market entrants,” the report said. “When China needs to flex its soft power muscles by embargoing rare earths, it does not hesitate.”
U.S. and Chinese news outlets have recently reported that Beijing is considering restricting rare-earth exports to the United States, as President Donald Trump this month signed an executive order banning American telecommunications companies from installing foreign-made equipment that could prove threatening to national security. The order is widely considered to target Chinese companies including Huawei and ZTE specifically.
The House Appropriations Committee also expressed their concern over China’s dominance in the rare earth elements market in the FY ’20 defense appropriations bill, passed May 21.
“A critical national security vulnerability exists because of continued dependence on Chinese rare earth materials for the military sector supply chain,” the bill report said. “Due to China’s willingness to restrict the rare earth material market, coupled with the risk to the national security supply chain, it is critical to reduce reliance on China’s rare earth materials. The Committee encourages the Secretary of Defense to invest in the development of a domestic source of rare earth materials.”